Corporate governance - Vigil

Stock in the world's largest online TV network shoots up more than 9% after reporting its strongest year of subscriber growth to date

The Investigation The Globe and Mail recently published a series of articles on its investigation into fraud in the capital markets and the issues surrounding enforcement and deterrence of repeat offenders. The one year investigation, reported by Grant Robertson and Tom Cardoso, analyzed 30 years of regulatory cases available online “in an effort to determine …

Thank you for that warm welcome.[1]  I am delighted to join you today by videoconference. I know Meredith [Cross] has prepared questions. I look forward to answering those, as well as questions from this distinguished audience. When I was teaching at UPenn law school, the best classes were the ones where students asked difficult, but informed, questions. With Meredith and this audience, I know that I am in for a treat.

As we approach the 2018 proxy season, a key change for companies will be the first publication of the CEO Pay Ratio as mandated by the Dodd-Frank Act of 2010. Companies will begin publishing CEO Pay Ratios in proxy statements in early 2018.

A fast-growing literature in finance and industrial organization studies whether and how “common ownership” links affect firm behavior and market outcomes. A new forthcoming paper, available on SSRN, reviews the rich history of thought on this topic. In addition to connecting the existing contributions in the economics and finance literature, the review also points to previous contributions in antitrust law, and offers ideas for future research.

[Last week], BlackRock CEO Larry Fink released his annual letter to CEOs, an important signpost for investor priorities in the coming year. In his letter, titled “A Sense of Purpose,” Mr. Fink says:

Former EY partner Amjad Rihan, who was dismissed after blowing the whistle on potential money laundering by precious metals services Kaloti Group, is now suing the Big Four firm

A casual observer of recent policy debates might reasonably conclude that sovereign debt crises of the sort that have ravaged Argentina, Greece, Ukraine, and Venezuela would be less frequent and less damaging if only debtors and creditors could tweak a few words in their bond contracts.

We recently published a paper on SSRN, Governance Gone Wild: Epic Misbehavior at Uber Technologies, that evaluates governance and leadership challenges through the example of the private ride-sharing startup Uber.

Over the past couple of years, we have seen traditional, actively managed funds, such as Neuberger Berman, borrow activist tactics and push for changes to accelerate increases in share prices. In parallel with this arguable trend toward convergence between actively managed funds and activist funds, a chasm appeared to be developing elsewhere in the investor landscape as pension and passive strategy funds increasingly focused on “social good” issues, while brand name activist funds remained primarily focused on nearer term financial performance and returns.

IMF projects more growth — but warns of problems ahead

The board of directors is the highest decision-making authority in a corporation. But sometimes boards struggle to make decisions. In surveys, 67 percent of directors report the inability to decide about some issues in the boardroom. Moreover, 37 percent say they have encountered a boardroom dispute threatening the very survival of the corporation. [1] Such a “division among the directors”—such deadlock on the board—“may render the board unable to take effective management action” and can even lead directors to “vote wholly in disregard of the interests of the corporation.” [2]

Firms employing highly skilled workers bear substantial direct and indirect costs when those workers quit. Hiring is expensive and departing workers can take institutional knowledge and intellectual property with them. These costs were high enough to induce Google, Apple, and other Silicon Valley firms to illegally collude not to hire each other’s workers, ultimately leading to a class-action lawsuit and a $415 million settlement in 2015. Turnover matters.

Stockholder plaintiffs recently entered into a $290 million settlement in connection with federal securities litigation arising out of Valeant Pharmaceuticals’ failed attempt to acquire Allergan. Activist hedge fund Pershing Square agreed to pay $193.75 million of the settlement in connection with its scheme to deliver Allergan into Valeant’s hands.

In the second half of 2017, the Delaware Supreme Court issued two seminal decisions concerning appraisal—DFC Global v. Muirfield (Aug. 1, 2017) and Dell v. Magnetar (Dec. 15, 2017). These decisions are likely to accelerate the trends already developing in the recently changed landscape for appraisal actions. Below, we discuss (i) the key points arising from the decisions; (ii) the background of the cases; (iii) the likely practical effect of the decisions; (iv) open issues; and (v) related practice points.

Board composition and performance continue to be under greater scrutiny than ever by various stakeholders. So, how do boards use their annual assessment process to measure effectiveness, drive refreshment and raise performance? This article examines what boards can do to get more value out of the assessment process.

This is now the fourth in the series of SEC-NYU dialogues, and I am pleased with the four topics that have been covered, as well as the quality of the discussions thus far. It is important that the SEC be able to take a forward-looking approach with respect to our securities markets—to keep up to date with key developments, and be alert to issues where regulation may be appropriate in the future. Hearing about new developments or theories—whether they require us to take specific action or not—is an important part of that process. At the end of the day, our ability to spot growing issues and head them off with thoughtful, informed, incremental regulation, or deregulation, will always be preferable to addressing problems retrospectively, including through enforcement.

JANA Partners LLC and the California State Teachers’ Retirement System (“we” or “us”) collectively own approximately $2 billion in value of shares of Apple Inc. (“Apple” or “you”).